Professional Documents
Culture Documents
DECISION
DEL CASTILLO, J : p
The state may not be sued without its consent. Likewise, public ocials may not
be sued for acts done in the performance of their ocial functions or within the
scope of their authority.
This Petition for Review on Certiorari 1 assails the October 25, 2007 Decision 2 of
the Court of Appeals (CA) in CA-G.R. CV No. 85670, and its March 31, 2008
Resolution 3 denying petitioners' Motion for Reconsideration. 4
Factual Antecedents
On December 22, 1998, Administrative Order (AO) No. 27 series of 1998 5 was
issued by then Department of Health (DOH) Secretary Alfredo G. Romualdez
(Romualdez). AO 27 set the guidelines and procedure for accreditation of
government suppliers of pharmaceutical products for sale or distribution to the
public, such accreditation to be valid for three years but subject to annual review.
On January 25, 2000, Secretary Romualdez issued AO 10 series of 2000 6 which
amended AO 27. Under Section VII 7 of AO 10, the accreditation period for
government suppliers of pharmaceutical products was reduced to two years.
Moreover, such accreditation may be recalled, suspended or revoked after due
deliberation and proper notice by the DOH Accreditation Committee, through its
Chairman.
Section VII of AO 10 was later amended by AO 66 series of 2000, 8 which
provided that the two-year accreditation period may be recalled, suspended or
revoked only after due deliberation, hearing and notice by the DOH Accreditation
Committee, through its Chairman. HDTSIE
On August 28, 2000, the DOH issued Memorandum No. 171-C 9 which provided
for a list and category of sanctions to be imposed on accredited government
suppliers of pharmaceutical products in case of adverse ndings regarding their
products (e.g., substandard, fake, or misbranded) or violations committed by
them during their accreditation.
In line with Memorandum No. 171-C, the DOH, through former Undersecretary
Ma. Margarita M. Galon (Galon), issued Memorandum No. 209 series of 2000, 10
inviting representatives of 24 accredited drug companies, including herein
CD Technologies Asia, Inc. 2016 cdasiaonline.com
respondent Phil Pharmawealth, Inc. (PPI) to a meeting on October 27, 2000.
During the meeting, Undersecretary Galon handed them copies of a document
entitled "Report on Violative Products" 11 issued by the Bureau of Food and Drugs
12 (BFAD), which detailed violations or adverse ndings relative to these
accredited drug companies' products. Specically, the BFAD found that PPI's
products which were being sold to the public were unt for human consumption.
During the October 27, 2000 meeting, the 24 drug companies were directed to
submit within 10 days, or until November 6, 2000, their respective explanations
on the adverse ndings covering their respective products contained in the
Report on Violative Products.
Instead of submitting its written explanation within the 10-day period as
required, PPI belatedly sent a letter 13 dated November 13, 2000 addressed to
Undersecretary Galon, informing her that PPI has referred the Report on Violative
Products to its lawyers with instructions to prepare the corresponding reply.
However, PPI did not indicate when its reply would be submitted; nor did it seek
an extension of the 10-day period, which had previously expired on November 6,
2000, much less oer any explanation for its failure to timely submit its reply.
PPI's November 13, 2000 letter states: HcSCED
Madam,
(signed)
ATTY. ALAN A.B. ALAMBRA
Vice-President for Legal and Administrative
Aairs 14
SEC. 26.. . .
(d)When it appears to the Director [of the BFAD] that the report of the
Bureau that any article of food or any drug, device, or cosmetic secured
pursuant to Section twenty-eight of this Act is adulterated, misbranded,
or not registered, he shall cause notice thereof to be given to the person
or persons concerned and such person or persons shall be given an
opportunity to be heard before the Bureau and to submit evidence
impeaching the correctness of the nding or charge in question.
For what it claims was an undue suspension of its accreditation, PPI prayed that
AO 10, Memorandum No. 171-C, Undersecretary Galon's suspension order
contained in her November 23, 2000 letter, and AO 14 be declared null and void,
and that it be awarded moral damages of P5 million, exemplary damages of P1
million, attorney's fees of P1 million, and costs of suit. PPI likewise prayed for the
issuance of temporary and permanent injunctive relief. cIHDaE
Petitioners' Arguments
Petitioners submit that because PPI's Complaint prays for the award of damages
against the DOH, Civil Case No. 68200 should be considered a suit against the
State, for it would require the appropriation of the needed amount to satisfy
PPI's claim, should it win the case. Since the State did not give its consent to be
sued, Civil Case No. 68200 must be dismissed. They add that in issuing and
implementing the questioned issuances, individual petitioners acted ocially and
within their authority, for which reason they should not be held to account
individually. CAIaHS
Respondent's Arguments
Apart from echoing the pronouncement of the CA, respondent insists that Civil
Case No. 68200 is a suit against the petitioners in their personal capacity for acts
committed outside the scope of their authority.
Our Ruling
The Petition is granted.
The doctrine of non-suability.
The discussion of this Court in Department of Agriculture v. National Labor
Relations Commission 32 on the doctrine of non-suability is enlightening.
The basic postulate enshrined in the constitution that '(t)he State may not
be sued without its consent,' reects nothing less than a recognition of
the sovereign character of the State and an express armation of the
unwritten rule eectively insulating it from the jurisdiction of courts. It is
based on the very essence of sovereignty. . . . [A] sovereign is exempt
from suit, not because of any formal conception or obsolete theory, but
on the logical and practical ground that there can be no legal right as
against the authority that makes the law on which the right depends.
True, the doctrine, not too infrequently, is derisively called 'the royal
prerogative of dishonesty' because it grants the state the prerogative to
defeat any legitimate claim against it by simply invoking its non-suability.
We have had occasion to explain in its defense, however, that a
continued adherence to the doctrine of non-suability cannot be deplored,
for the loss of governmental eciency and the obstacle to the
performance of its multifarious functions would be far greater in severity
than the inconvenience that may be caused private parties, if such
fundamental principle is to be abandoned and the availability of judicial
CD Technologies Asia, Inc. 2016 cdasiaonline.com
remedy is not to be accordingly restricted.
The rule, in any case, is not really absolute for it does not say that the
state may not be sued under any circumstance. On the contrary, as
correctly phrased, the doctrine only conveys, 'the state may not be sued
without its consent;' its clear import then is that the State may at times be
sued. The State's consent may be given either expressly or impliedly.
Express consent may be made through a general law or a special law. . . .
Implied consent, on the other hand, is conceded when the State itself
commences litigation, thus opening itself to a counterclaim or when it
enters into a contract. In this situation, the government is deemed to
have descended to the level of the other contracting party and to have
divested itself of its sovereign immunity. This rule, . . . is not, however,
without qualication. Not all contracts entered into by the government
operate as a waiver of its non-suability; distinction must still be made
between one which is executed in the exercise of its sovereign function
and another which is done in its proprietary capacity. 33 aTcIEH
It is beyond doubt that the acts imputed against Secretaries Romualdez and
Dayrit, as well as Undersecretary Galon, were done while in the performance and
discharge of their ocial functions or in their ocial capacities, and not in their
personal or individual capacities. Secretaries Romualdez and Dayrit were being
charged with the issuance of the assailed orders. On the other hand,
Undersecretary Galon was being charged with implementing the assailed
issuances. By no stretch of imagination could the same be categorized as ultra
vires simply because the said acts are well within the scope of their authority.
Section 4 of RA 3720 specically provides that the BFAD is an oce under the
Oce of the Health Secretary. Also, the Health Secretary is authorized to issue
rules and regulations as may be necessary to eectively enforce the provisions
of RA 3720. 48 As regards Undersecretary Galon, she is authorized by law to
supervise the oces under the DOH's authority, 49 such as the BFAD. Moreover,
CD Technologies Asia, Inc. 2016 cdasiaonline.com
there was also no showing of bad faith on their part. The assailed issuances were
not directed only against PPI. The suspension of PPI's accreditation only came
about after it failed to submit its comment as directed by Undersecretary Galon.
It is also beyond dispute that if found wanting, a nancial charge will be imposed
upon them which will require an appropriation from the state of the needed
amount. Thus, based on the foregoing considerations, the Complaint against
them should likewise be dismissed for being a suit against the state which
absolutely did not give its consent to be sued.
Based on the foregoing considerations, and regardless of the merits of PPI's case,
this case deserves a dismissal. Evidently, the very foundation of Civil Case No.
68200 has crumbled at this initial juncture.
PPI was not denied due process.
However, we cannot end without a discussion of PPI's contention that it was
denied due process when its accreditation was suspended "without due notice
and hearing." It is undisputed that during the October 27, 2000 meeting,
Undersecretary Galon directed representatives of pharmaceutical companies, PPI
included, to submit their comment and/or reactions to the Report on Violative
Products furnished them within a period of 10 days. PPI, instead of submitting its
comment or explanation, wrote a letter addressed to Undersecretary Galon
informing her that the matter had already been referred to its lawyer for the
drafting of an appropriate reply. Aside from the fact that the said letter was
belatedly submitted, it also failed to specically mention when such reply would
be forthcoming. Finding the foregoing explanation to be unmeritorious,
Undersecretary Galon ordered the suspension of PPI's accreditation for two years.
Clearly these facts show that PPI was not denied due process. It was given the
opportunity to explain its side. Prior to the suspension of its accreditation, PPI
had the chance to rebut, explain, or comment on the ndings contained in the
Report on Violative Products that several of PPI's products are not t for human
consumption. However, PPI squandered its opportunity to explain. Instead of
complying with the directive of the DOH Undersecretary within the time allotted,
it instead haughtily informed Undersecretary Galon that the matter had been
referred to its lawyers. Worse, it impliedly told Undersecretary Galon to just wait
until its lawyers shall have prepared the appropriate reply. PPI however failed to
mention when it will submit its "appropriate reply" or how long Undersecretary
Galon should wait. In the meantime, PPI's drugs which are included in the Report
on Violative Products are out and being sold in the market. Based on the
foregoing, we nd PPI's contention of denial of due process totally unfair and
absolutely lacking in basis. At this juncture, it would be trite to mention that
"[t]he essence of due process in administrative proceedings is the opportunity to
explain one's side or seek a reconsideration of the action or ruling complained of.
As long as the parties are given the opportunity to be heard before judgment is
rendered, the demands of due process are suciently met. What is oensive to
due process is the denial of the opportunity to be heard. The Court has
repeatedly stressed that parties who chose not to avail themselves of the
opportunity to answer charges against them cannot complain of a denial of due
process." 50 cEaACD
Footnotes
9.Id. at 111.
10.Id. at 27.
11.Id. at 28-40.
12.Per Republic Act No. 9711 or the Food and Drug Administration (FDA) Act of 2009
which was signed by the President on August 18, 2009, the Bureau of Food
and Drugs (BFAD) was renamed and is now called the Food and Drug
Administration (FDA).
13.Records, p. 41.
14.Id.
15.Id. at 42.
16.Id. at 43-44.
35.Id. at 792.
36.Id. at 793.
37.Id. at 795.
38.Equitable Insurance and Casualty Co., Inc. v. Smith, Bell & Co. (Phils.), Inc. , 127
Phil. 547, 549 (1967).
39.Department of Health v. Phil Pharmawealth, Inc. , 547 Phil. 148, 154 (2007).
40.G.R. No. 159402, February 23, 2011, 644 SCRA 36.
52.Id.